That's what Special Inspector General for the TARP (SIGTARP) Neil Barofsky wants to know.

Barofsky announced on Wednesday that he will be launching an investigation into how the Treasury Department decided to back some $300 billion in potentially bad bets made by Citigroup, Inc. The guarantees, mind you, were made on top of $45 billion in direct cash infusions into the megabank.

The Federal Reserve, the Treasury and Federal Deposit Insurance Corp in November guaranteed a $306 billion pool of Citigroup mortgage assets as they fought to prevent the collapse of the U.S. banking system amid a global financial panic.

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Barofsky said the probe would focus on how the decision to provide the guarantee was made, how the assets were chosen, what the assets are, how risk is being managed, and what safeguards are in place to protect taxpayer interests.

"We anticipate finalizing the audit plan and issuing a formal audit announcement shortly," he said in the letter to U.S. Representative Alan Grayson, a Democrat from Florida.

Grayson said he had questions about the guarantee and what it meant for taxpayers, and he wanted to know much had already been lost if the assets were marked-to-market.

Image by Flickr user John Wardell (Netinho) used under a Creative Commons license.